State agencies told to limit budget requests due to looming federal funding cuts

• Gov. Katie Hobbs’ budget director sent a letter to state agency heads imposing a limit on fiscal year 2027 general fund requests • Agencies can request an increase of “no more than 2%” of their FY2026 allocation for FY2027 due to a “federal fiscal cliff” • Hobbs’ spokesman Christian Slater blamed the limit on the passage of President Donald Trump’s “Big Beautiful Bill”

The Governor’s Office is instructing state agencies to significantly limit their budget requests for fiscal year 2027 due to federal funding uncertainties.

A letter sent by Gov. Katie Hobbs’ budget director, Ben Henderson, to state agency heads on July 18 instructed all agencies to cap their FY2027 budget requests from the state’s general fund at “no more than 2%” of what they were appropriated from the general fund